The clustering problem in large-scale systems is known to be NP-complete. The authors present an algorithm based on an iterative improvement mechanism by using the method of simulated annealing with two types of perturbations: B-move and C-move. In all test cases, their algorithm shows improved results compared to previous methods. For a real circuit example with 95 vertices and 177 edges, the algorithm produces the solution of four clusters and three bottleneck vertices while the algorithm of A. Sangiovanni-Vincentelli et al. (1977) produces the solution of five clusters and six bottleneck vertices.<>